Tuesday, August 7, 2007

Debt Markets Continue to Implode

Real Estate Finance and Investment is reporting that five securitizations worth at least $4.8 billion have been pulled from the market in the last week.

So far this does not seem to have much impact on pricing of commercial real estate. Surely, less debt is available and the pricing is less favorable, but there is still gobs of capital dedicated to real estate that are looking for investments. Highly leveraged deals and buyers relying on lots of debt are running into trouble. WSJ.com is reporting that the parties have extended the closing for the Tischman Speyer / Lehman acquisition of Archstone-Smith.

The debt markets are continuing to crush the residential real estate market. American Home Mortgage Investment has gone belly-up, National City has stopped offering some products through brokers and now jumbo loans are running into trouble: Mortgage Fears Drive Up Rates on Jumbo Loans (WSJ.com $$).

The problem with the jumbo loans is that they cannot be purchased and guarantied by Fannie Mae or Freddie Mac. That limts the resale value of the debt and the securitizations of the loans.

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